Closed-loop systems add an extra element to allow the controller to detect changes in the controlled system, and compensate accordingly. To show this capability, you need to draw one more arrow on your diagram. This arrow begins at the top of the existing right-hand box (the 'engine'), and runs to the top of the existing middle box (the 'ECU').

[Although you really should be doing this yourself, you can see the closed-loop digram here.]

This extra arrow represents a quantity known as feedback. This means just what it says: some part of the operation of the controlled system is measured and 'fed back' to the controlling system. Feedback represents very useful information, because now the control system can apply a signal to the controlled system and measure the results of that signal.

Going back to the simple heater example, we already have an input system (the temperature sensor), a controller, and a controlled system (the heater). To introduce feedback into the system, we could add a temperature sensor inside the heater itself, capable of measuring the actual heat output of the unit. Prior to this, the control system would measure the air temperature and direct the heater to generate a certain output. With the addition of the extra heater sensor, the control system can actually check to see if the heater is producing the correct amount of heat, and react accordingly.

So, as the heater wears and output drops, the controller will 'notice' the drop in output and can direct the heater to produce more heat to compensate. The heating system will continue to work correctly until the heater breaks, or becomes so worn that it can't compesate for the output losses any more. Once this happens, though, a 'smart' controller can always sound an alarm or send an error message of some kind.

So, closed-loop operation allows the controller to compensate for external variations that may affect the operation of the controlled system. Since very few parts in the real world are absolutely precise, closed-loop operation is a necessity in virtually all control systems.